UK government electricity levy petition - Remove environmental taxes from electricity to encourage heat pump installations

Signed.

While I would personally love cheaper electricity, I'm not sure eliminating electricity levies is either the right thing to do or likely to happen.  Surely we need to keep encouraging green electricity.  I would rather see extra levies put on gas to even up the price and any extra revenue generated used to subsidise insulation, etc.   I think that will be more effective and also more likely to happen.  It won't be popular though ... 

Posted by: @kev-m

While I would personally love cheaper electricity, I'm not sure eliminating electricity levies is either the right thing to do or likely to happen.  Surely we need to keep encouraging green electricity.  I would rather see extra levies put on gas to even up the price and any extra revenue generated used to subsidise insulation, etc.   I think that will be more effective and also more likely to happen.  It won't be popular though ... 

Controversial 😆 

@editor , it was meant to be 😉 

A few personal thoughts

I suspect by law some of the levy needs to stay with electricity for now, e.g. some carbon costs, AAHEDC etc, else the government may end up in court. We still have a lot of carbon electricity generation in the short term. We may yet find the Biomass generated electricity from the Drax etc. power stations becomes internationally unacceptable in a few years years as well which may complicate things. 

Others costs could reasonably be split across gas and electric, and some loaded more on gas I think. 

Having a levy similar to VAT on energy bills  may simplify things, say 10% and this would mean there wouldn't need to be any tweaking in the gas vs electric levy going forward as things evolve. Simply remove the current separate gas and electric levy. This would reduce the costs of running an ASHP and increase the cost of gas heating. 

I suspect we will always need a levy even when gas goes completely so I don't think moving all the levy to electricity is realistic. We have a similar issue with electric cars in a few years, they will have to bring in road pricing or something similar for electric cars to pay for roads and contribute to general taxation as the tax collected on petrol plummets. Although the cost of buying an electric car will fall, the cost of running one will increase at some point with road pricing. 

I agree increasing the levy generally would help fund a faster switch and I would like to see that as well as whatever they do with switching some or all the current levy.

ECO is the current biggest levy cost and this seems a good one to switch. In the past and even now it is used to install gas boilers and gas central heating in homes with only electricity. We haven't yet got to the point where the ECO is being used for taking out gas primarily due to the high upfront cost of retrofitted ashp. ECO is all about fuel poverty rather than the environment in reality at the moment although it does cover insulating. Am sure this will change at some point. 

The Environmental and social obligation costs on utility bills include:

Carbon Certificates,

Carbon Price Floor costs,

Energy Company Obligations (“ECO”),

Renewable Obligation Certificates (“ROCs”),

Warm Home Discount,

Levy Exemption Certificates (“LECs”),

Feed in Tariffs (“FiT”),

Assistance for Areas with High Electricity Distribution Costs (“AAHEDC”).

The contradiction in energy pricing is that the high price of electricity relative to gas is the opposite of what is needed to encourage customers to switch. However, for those that have done so, it is a great motivator to use it sparingly. I am far more focused on my daily energy usage now than I ever was with gas central heating.

It will always be a hard sell to consumers - spend a lot of money to switch to a heating solution that may not be cheaper to run than your existing one.

@mike-patrick, I wholeheartedly agree. The issue, however, is that we were sold an ASHP that promised to run cheaper than oil and LPG, which it has until now. Electricity tariffs are always on the rise. Oil and LPG may be volatile in terms of spikes, but they always seem to settle down in the sweet spot. Something similar needs to happen for electricity used for heat pumps in particular.

@editor I recently corresponded with Baroness Brown (Climate Change Committee). She agreed that the pricing of electricity relative to oil and gas needs to change if people are to be encouraged to switch to heat pumps. She and the Committee have some influence with government so let's hope they can bring the requisite pressure to bear.

Mike